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HOW WILL MY BENEFITS BE WORKED OUT AFTER 1 APRIL 2008?
From 1 April 2008, the Local Government Pension Scheme (LGPS) remains a FINAL SALARY pension scheme. This means that your benefits are normally based on your final year's pay and the number of years you have been a member of the Scheme.
What benefits will I receive when I retire after 1 April 2008?
As a member of the Scheme BEFORE 1 APRIL 2008, when you retire you will receive both an annual pension paid monthly for the rest of your life together with an automatic tax-free lump sum.
The two main factors used to calculate your retirement pension will still be:
- your total membership in the Scheme AND
- your final pay
For each year you have built up in the scheme to 31 March 2008, you will receive a pension of 1/80th of your final year's pay plus an automatic tax-free lump sum of 3 times your pension.
For each year you build up from 1 April 2008 your pension will be at the increased rate of 1/60th of your final year's pay. There will be NO automatic lump sum for membership built up after
31 March 2008.
Can I exchange some of my pension to give myself additional tax-free lump sum?
Yes. You can exchange part of your annual pension to take additional tax-free lump sum. You can take up to 25% of the capital value of your LGPS benefits as a lump sum.
Every £1 of annual pension that you give up you will receive an extra £12 lump sum. In the same way, giving up £100 of your annual pension would give you an extra £1,200 lump sum.
An option to take a lump sum has to be made in writing before your benefits are paid. So that you have plenty of time to make up your mind and seek financial advice if you wish, it is important you contact the Fund well in advance of your intended retirement date so can be provided with an estimate of these amounts.
